Apple and Microsoft have not had a lot of good press lately, but in spite of the issues both companies have faced, their quarterly reports released this week showed two companies that are still extremely profitable.
Microsoft Comes Through
In spite of giving up on the Kin and a mobile strategy that seemed in shambles, Microsoft rode the wave of its old chestnuts, Windows and Office, to a very profitable quarter. They reported a "record fourth-quarter revenue of $16.04 billion for the quarter ended June 30, 2010, a 22% increase from the same period of the prior year." Not too shabby all things considered, but there is an underlying issue there.
You have to wonder how long they can continue to depend on Windows and Office. Sure, XBox did OK and Bing helped, but it was really their old standards that won the day. As more free and low-cost services including Google, crowd out these expensive options, Windows and Office can't sustain the company forever. While the press release made noise about their cloud strategy and the hype machine is in full gear for the upcoming release of Windows 7 Mobile in the Fall, Microsoft still leans heavily on its standard bearers.
Apple Does Even Better
As good as Microsoft's numbers were, Apple's were even better. When you consider the issues it had with the iPhone 4 antenna, you would think perhaps they were faltering a bit, but you would be wrong. According to numbers released by Apple this week, they had an overall earnings increase of over 78 percent. That's astonishing by any measure, but especially when the perception was they were having issues. As bad as it seemed, the company still managed to sell 8.4 million iPhones in the quarter, representing 61 percent unit growth over the year-ago quarter. Although some of those iPhone sales preceded the iPhone 4 problems, it still represents an impressive number of units of sold.
While iPod sales declined slightly, you would expect that as more people buy iPhones with iPod functionality included in the package.
Microsoft and Apple continue to be major powerhouses in technology in spite of the bumps and bruises they appeared to both suffer throughout this year. Whether they can continue to maintain such phenomenal growth over the long term remains to be seen, but for this quarter at least, both companies are sailing along just fine.
